Ruben Bolling at 6:37 am Tue, Mar 15, 2011
The 1964 World's Fair opened 50 years ago today
Hannibal: Guilt is a divine beast of burden in "Su-zakana" [Season 2, episode 8 recap]
Mmm – I am going to have to take off points for lack of monocle, no mustache twisting, and no Daphne on Velma scenes.
Can someone who understands economics explain to me what the top 1% have to gain if the rest of us are too broke to buy their garbage?
Your premise seems to be that the US consumers are the only one buying Moneybags’s stuff.
He can sell to Europe, Asia, anywhere there is a strong or burgeoning economy.
More than cheap labor, I think the point of disenfranchising the middle class is to raise the barrier to entry of whatever field you’re in, making sure you’ll remain competitive in the market without actually having to compete. In short, it’s rent-seeking. http://en.wikipedia.org/wiki/Rent-seeking
Even if the middle class and the poor are squeezed, they still need to buy things.
For multi-national corporations, the role of the US may no longer be as a source of consumers.
We’re useful for other things. Tax loopholes that allow for money laundering. A pretty much for-hire military.
Don’t make the mistake of thinking it will never get that bad here because the rich have some kind of vested interest in keeping the poor at least comfortable and happy. They don’t.
I don’t have all the answers, but I think that it’s easier to understand Mr. Moneybag’s motivations if we look at the austerity measures that the IMF and World Bank (ie, the USA) shoved down the Third World’s throat under the neoliberal Washington Consensus.
Before the Washington Consensus, Third World countries were poor but (relatively) egalitarian. Afterward, there was a very thin layer of affluence at the top, with the vast majority beneath even poorer than before. (Sound familiar?)
So, what happened? Well, the IMF/World Bank’s “development model” for the Third World coincidentally involved making the Third World a very attractive place for American (and other Western) business. So harsh austerity measures were introduced, and the savings were used to pay off foreign debt (ie, debt to the West), and to cut taxes, notably business taxes. Lower taxes (along with other pro-business perks, such as deregulation) attracted Western sweatshops, who exploited the cheap, newly-desperate (because of the austerity) labor, in a kind of neocolonialist arrangement. Indeed, the colonialist analogy is quite good, because, as with colonialism, neoliberal neocolonialism creates a thin layer of local business elites (managers, professionals, etc.) who profit from the exploitation of their countrymen, and so are among the most ardent supporters of the exploitation.
Western businesspeople have been pretty open about wanting to duplicate this “success story” here. Consider Carly Fiona’s push for a more favorable domestic business climate, and compare it to the IMF’s creation of a more favorable business climate abroad:
“Talking about business tax rates and lowering them is not about rewarding companies that ship jobs overseas; it is about acknowledging the reality that companies go where they are welcome. And the truth is our companies in terms of tax rates, in terms of governments willing to help them form, in terms of access to credit, our companies are now more welcome in some places like China and India than they are in parts of the United States.”
This is what is known as a “race to the bottom”: each country competes to have the lowest taxes (and, consequently, the fewest government services), to have the most favorable business environment, which means being the most exploitative of labor. There’s nothing inevitable about this: you could prevent it with capital controls, as there were, indirectly, through the Bretton Woods system (1945-1975). But the business elites who control Western governments would never allow a return to restricted capital.
In addition to “race to the bottom,” this has also been referred to as “the Third World-ification of the First World.” The vanishing of the Middle Class, and the rising gap between rich and poor, are both testaments to the success of this effort.
It’s all about creating a favorable business climate. If austerity measures are seen to create a favorable business climate, as they did in the Third World “reforms,” then the business community will support them here as well.
It’s good to see the good guys win for a change. Thanks Tom!
Hm. Now that I’ve posted that, the Wikipedia article focuses mostly on control of the regulatory environment to prevent competition, but that wasn’t my point. My point is that you have an incentive to lock down economic mobility in general – downward as well as upward – if you’re at the top.
An ancient problem, the excessive accumulation of capital produced by the work and labours of society:
Loved today’s piece. Reminded me of an also hilarious Scooby Doo piece by Ward Sutton some years ago. http://www.villagevoice.com/2006-05-16/news/modern-scandal-explained-through-scooby-doo/
using Scooby Doo to explain the massive debt load seems disingenuous, at best
Anon in reply to glaborous immolate
But how does destroying the poor and middle class benefit Mr Moneybags?
Good question, and one I’ve often wondered myself. If the poor (and especially the middle class) are squeezed, who is going to buy all the crap that Mr. Moneybags’ corporation sells?
My favorite economist and favorite cartoonist brought together in one strip — Ranks, Rooby Roo!
People always ask about why the rich would destroy the middle class. Look at third world countries, and how rich people live there. Wealth gives basically unlimited power. By contrast, in countries with organised workers and a stable middle class, rich people can go to prison, lose their money, or even have to pay taxes.
The simple fact is, the worse off everyone else is, the more power being rich gives you, and rich people are aware of that even as they do everything in their power to distract everyone else from that.
Yes, this ignores many long term issues, but it’s important to realise that wealth has only a minimal connection to merit – family, connections, crime, and pure dumb luck are all far more likely sources of wealth. Many rich people are quite stupid and/or short sighted. The idea that masses of poor people with no healthcare are a breeding ground for disease, for example, is far harder to grasp than the idea that not giving the poor healthcare means you have more to hold over them to enforce compliance with your desires.
Tom the Dancing Bug, you are my hero. Great comic.
Several early commenters asked “how does it benefit the rich to make the middle class and poor poorer?”
I believe the answer you’re looking for is “supreme dictatorial power” and “fiscal inability to enforce secular law” – also known as oligarchy. Want your kids to eat? Dance to our tune!
The Shock Doctrine in slow mo.
But how does destroying the poor and middle class benefit Mr Moneybags?
Is he just in it for the kicks?
The elite in the antebellum south did very well exploiting the free labor of slaves. The same can be said of the elite of the Roman Empire. They weren’t concerned that the vast population of poor and the near poor were a vast untapped source of creativity and progress. As long as they were comfortable they really preferred things to stagnate and weren’t concerned with the well being of the majority.
Once things get to this point the only way to break it is with violent revolution (Russia) or a disaster (Civil War, fall of Rome, etc). They will never give up their position willingly. Just look at Bahrain.
If the poor (and especially the middle class) are squeezed, who is going to buy all the crap that Mr. Moneybags’ corporation sells?
As much as this comic has flaws, that argument isn’t a valid argument at all. You think people don’t make millions selling things to the poor? What about McDonald’s, Coca cola, Goya, slumlords?
@immolate: In order to have cheap labor, you have to have a ready pool of poor laborers willing to work for cheap. When everybody’s middle class the cost of labor goes up.
As I see understand it, people with a lot of money prefer inflation very low, or else the amount of money they have loses value. The more money you have the more you seem to worry about inflation. This is known as capital preservation.
A bit of inflation actually helps people who are in debt, as their debt also loses value as compared to the money they will make as they pay off the debt.
It also has to do with who controls the economy. Those who have, prefer that business not get involved in “the business cycle”. If the government can at times play a role in improving the economy they become less central to the process. This is of course a big risk to the size of the profit margin.
Mr. Moneybags doesn’t need the US consumer anymore… most of his profits come from abroad, and most of his workforce is there as well. Destroying the US middle and lower class is more of a side-effect of less environmental/financial services/labor market regulation, lower education spending, lower infrastructure spending, all because Mr. Moneybags doesn’t pay corporate taxes and pays very little in personal income tax. That thing about Mr. Ford needing to pay his workers enough to buy the cars he makes is no longer applicable, especially because the US worker can now settle for getting into debt to buy everything, which also means Mr. Moneybags makes money on bank fees, high credit card interest rates, all sorts of securitization nonsense, etc.
pjk has got it right. This also explains why Mr Moneybags not too concerned about education either – he can find smart people somewhere else, therefore it is an unnecessary expense. Mr Moneybags has no nationality and lives above the law. He has no allegiance to our or any other flag. In certain respects it’s beginning to look like pre-revolutionary France.
What’s in it for Mr. Moneybags? Scooby himself explains it in the last panel- lower taxes. He’s got his, screw the rest of us.
I’m also interested in your question.
> But how does destroying the poor and middle class benefit Mr Moneybags?
I’ve read that economists have worked out that
there’s a percentage (greater than zero) of unemployment that will help the economy grow faster than if the unemployment rate is lower or higher.
I also like the answer as keeping inflation zero to preserve value. This benefits savers both rich or poor, but I guess the it’s more about maintaining status quo. No point in being more rich if it also means poor getting more rich (i.e. to middle class)
I like the comic, but I’m interested in glaborous immolate’s comment as well. What exactly is in it for Mr. Moneybags? How does austerity help him?
Well, this does not answer your question; but it may help you to think about that question:
Wow, not a single post that actually answers the question.
The “bond vigilantes” are no threat because they have been bought off. They buy the bonds, but they only keep them for a week or two, then sell them back to the Fed at a profit under the Quantitative Easing program. (Now into round 2, which will expire in June, and proceed to QE3, QE4, etc.) They are paid in freshly printed (digital) money, and get first use of it, the same way a counterfeiter gets first use of his freshly printed money. This is known as monetizing debt, and we are printing almost enough to monetize the entire debt, about $100-110 billion/month. So almost nobody really buy bonds (aka debt) in the traditional sense. No bond vigilantes left. They’re just buying the bonds, flipping them back to the Fed, and collecting a profit.
They then reinvest these freshly-printed dollars in commodities, driving oil, metals, food, etc. through the roof. People who buy food and other products made from these commodities (ie. the lower and middle classes) find their dollars purchasing less and less. The effect of the whole scheme is to transfer money out of the pockets of the poor and middle classes to the pockets of the wealthy “primary dealer” bankers who are big and connected enough to take part in the bond-flipping process.
Why would these “vigilantes” ruin a scheme they’re profiting from.
And along comes Ruben Bolling with a handy little cartoon that simply dismisses the bond vigilantes out of hand, without explaining why they’re no threat any more, or how the lower or middle classes are still going to be paying them off. It’s just that the austerity is being enforced by silent, inexplicable inflation, rather than any policy that had to be debated, or which anyone could be held accountable for.
Isn’t the benefit of a gutted middle class, a larger pool of people to lend some of your wealth to, at “fuck my life” interest rates?
The money is heading to the top, and the debt is “trickling down” to the bottom. Keep it going and demand will once again have a seizure, and the economy will dive bomb once again.
But by all means, extend tax cuts to those lowly rich folks, or they’ll take their business elsewhere!
hahahaha “apologies to hanna-barbera-krugman”
Obviously the answer is that there’s much more money to be made oppressing poor, unfortunate-but-good-hearted, un-employed people than starting and maintaining productive enterprises.
Because everyone knows it’s a zero-sum game: in order for Moneybags to have more, poor people have to have less. Right?
It couldn’t possibly be that the economy grows in response to innovation and free enterprise, right? And that some people, at fault or not, get left behind, right?
Nah, it’s much easier to blame the rich. Who do they think they are, anyway? Bill Gates and Steve Jobs and all those other guys who create businesses and drink their mead out of poor-people-head tankards.
“Because everyone knows it’s a zero-sum game: in order for Moneybags to have more, poor people have to have less. Right?”
The thing about wealth disparity is that, as the rich get more, everyone else does end up effectively having less. It’s not a closed system, but it’s not a truly open system either.
Where can I get some of this “mead” that you mention? And the poor-people-head tankards, are those something I find on Amazon, or is it more of a DIY thing?
Please, name some fourth-generation coupon clippers too, so that we may praise them too.
Hey, it’s not like Steve Jobs is responsible for anything. He would be perfectly happy to pull down $50K a year and do the same job he’s been doing, right?
I love TTDB, but using Scooby Doo to explain the massive debt load seems disingenuous, at best. He could just recreate a drawing of the GDP to spending graph, except that’s gonna use scary numbers and is gonna be the total opposite. It’s much easier to use an old, white guy who’s rich and evil.
Like Milton Friedman said ‘none of us are greedy, it’s only the other fellow who’s greedy’
Has not every economy which took Friedman seriously enough to actually follow his advice come to grief?
Name the successes, if you can.
Instead of quoting Milton Friedman, let’s quote former Democratic senator Russell Long, whose philosophy seems to be endorsed by many on FR:
“Don’t tax you. Don’t tax me. Tax that fella behind the tree!”
Bill Gates and Steve Jobs and all those other guys who create businesses and drink their mead out of poor-people-head tankards.
I understand that if you shout “Got mine. Fuck you!” for twenty minutes in front of the mirror, John Galt will appear.
Plus one to you, good sir!
Two words: inheritance taxes.
RB has fallen into the painfully widespread trap: “It’s conspiracy of the worst kind: it’s against us!”
I have no love for mega-corporations or the top 1% or whoever is “the rich” these days, but they are working in collusion to “destroy” the poor or middle class. They’re only self-interested, to self-interested to effectively engage in widespread conspiracies.
The truth is they aren’t really against the poor, they’re just indifferent to them, as we are all mostly indifferent to random unknown folks that aren’t us.
The only real “conspiracy” they may be involved in is the same one almost everyone is involved: the pernicious belief that somewhere out there, somebody is getting over, receiving benefits they don’t “deserve.”
Rooby roo indeed.
How does poor people suffering help the rich? Nobody knows, but it’s been bothering them since FDR that the poor weren’t suffering enough. Thank God THAT’s finally done with.
If you like what high unemployment has done for the working class, you’ll love what commodity inflation does!
Ugly Canuck’s point about short-term gratification is probably quite relevant. There are two other reasons I can think of: a mindless adherence to right-wing ideological dogma, and also the fact that the rich can benefit from disenfranchising the poor and middle class. All this regulation and union pressure prevents the rich from benefiting from the fact that human life and human labor is, on the right-wing idea of the “free market”, dirt cheap. Furthermore, thanks to modern industrial practices that labor can be viciously exploited to produce vast amounts of wealth for whoever ends up owning that labor output. A high unemployment rate means the “invisible hand” won’t encourage the rich to share (since they can take advantage of the workers’ desperation). The problem is exacerbated if the laws and regulations that do exist are skewed in favor of the economically incumbent (and they are). Ultimately it’s not so much a failure of regulation or the market; it’s a failure of the little people (who vastly outnumber the rich, after all) to intelligently and vigilantly defend their interests and the interest of society and the economy in general.
We The People are allowing a disproportionately powerful minority to run amok, to the detriment of all.
I’ve recently thought of a theory that explains how the situation you’ve described has come into being: The proliferation of passive entertainment in the home (TV and some uses of the internet being the primary examples) has directly caused the majority of Americans to spend a large chunk of their day (6, 7 hours, on average?) effectively doing nothing; I say “doing nothing,” because almost always, you don’t become better informed, and subsequently behave in ways that affect society beneficially, after watching a TV show, or a YouTube video. I further surmise that this inactivity in front of a TV and computer also causes a generally inactive behavior in many people. And with an inactive populace, there won’t be widespread, nationwide protesting, forcing very very big changes to happen, like the abolition of all the DMCA, ACTA, repeated copyright extensions, etc. nonsense (I’m going to guess most people aren’t even aware of the issues of copyright nowadays. BoingBoing posters are really the exception.), and never reinstating such crap.
Wait! You didn’t take off his SECOND mask!
But the US is not any other country, durfsmurf. You can’t apply a model that works for Argentina, or Brazil, or Botswana to the US because our economy differs from theirs on a fundamental level. That’s why “If this was happening in almost any other country we would have had a collapse of debt long ago,” is a specious argument. You reference Argentina as a formerly strong economic power as though the US was directly comparable to it, which is laughable on face.
Your “normally accepted measures” are a crock as well–are they “accepted” in the wake of the biggest banking crisis in 100 years? Perhaps a different set of measures should be used to reflect the current situation. You are out of your mind if you think any investor of any size would even begin to consider the Brazillian real as a replacement for T-bills. The closest thing to your predicted nightmare was the strong Euro, which went straight in the toilet in the crisis as well, and actually came out far worse.
Scaremongering a debt crisis at a time of 12% unemployment and probably 15% underemployment is completely counterproductive to recovery. If you want to kill governemt programs you don’t like, that’s fine. I have some I want to kill as well. But I’m not going to lie about a made-up crisis to delay a recovery from this very real disaster to make it happen.
No, no, no. I always said that our position in the world is very unique. And I know our economy is different, but the same forces at work in the case of Argentina have worked for nations all over the world.
I don’t think that any investor would accept the Real instead of the US dollar. I DO think that they would accept the IMF “special drawing rights”
instead of the US dollar, then Brazilian debts valued and payable in SDR currency. In fact, THAT’S WHAT CHINA IS TRYING TO DO. They haven’t even tried covering it up. Countries are actively trying to find alternatives to the US dollar.
Stop calling this “scaremongering”. It’s so annoying that people who disagree with or don’t understand what you’re trying to say think you’re trying to “frighten” them. You respond to this however the hell you want, I have no control over how easily scared you are. And I’m sorry that you love our enormous overseas military presence so much that you don’t want to lessen spending on it, but we have to do it whether you or I likes it. It’s not a matter of what we enjoy but a matter of what most likely has to happen.
And maybe you’re not going to lie. You’re just going to accuse me of lying because you can’t figure out that maybe, just maybe, some people don’t see things in an absolute partisan way and we put actual thought into issues and we are concerned for the wellbeing of this country.
Sorry, I mean, “grrr, Rebublicans! They all hate the poor! Let’s get ‘em!” Maybe you can understand that better.
This is as good a conversation as I have had on this topic. Your points, clarified, are well argued. You and I are in complete agreement (I imagine) on the meta-topic of how this crisis is discussed–everywhere one looks partisan rhetoric dressed in macro clothes frames the debate.
It’s a little weird this occurs in a comment thread of a Scooby-Doo cartoon. But I’ll take it where I can get it.
Sorry I got kinda pissy. It just drives me nuts because I like talking about certain issues, like economics, because they are complex and not all about knee-jerk emotions (like, say, a discussion about abortion or gay rights or religion). And I like that BoingBoing is better than most web forums about reasonable discussions.
So when a discussion here seems to lean in a reactionary direction it makes me irrationally annoyed because I don’t expect it.
Also I get annoyed at Tom the Dancing Bug because I’ve been a fan since 1996 and I think Ruben is a really good cartoonist with a really good sense of humor, when he sticks to funny things. When he tries getting into complex politics it ruins it for me, because the humor is not original observations or twists on things (percival dunwoody, charley the australopithecine), it’s “haha these people are dumb and I am smart”. Look at this cartoon; it’s nothing but a Scooby-Doo analogy! That has been done like a million times before!
If Republicans were actually talking about cutting military spending in a meaningful way instead of gunning for programs which are known to be their political targets – and which don’t have anywhere near the funding necessary to truly affect the budget – it’d be a lot easier to see this current “crisis” as something more than scaremongering. It’d be great if the Dems were actually talking about cutting military spending instead of spinning the story around for their own gains, too, but it seems that the military is still culturally untouchable. Thankfully there was a bit of this done already in the form of scrapping some expensive aircraft upgrades, and we look to be on schedule for pulling “completely” out of Iraq, so we might actually see big military cuts by the end of this year/beginning of next… assuming that the election cycle building up gets in the way of it. Even so, we’ll probably have a decently sized chunk of funds become available once again by that time, so trying to cut as much as possible now is probably not the best decision.
Reminder that Reuben Bolling is an economist so he probably knows this subject more than any of you guys. He certainly knows more than me. I don’t even know what this is about.
if that is true, then they have forgotten the old saying, “You get what you pay for”.
And perhaps they have also forgotten its corollary truth: “You pay for everything you get”.
One problem a lot of people miss with increasingly extreme distribution of wealth is how much more volatile it makes that wealth. The extreme example is someone like Duvalier, who up and left Haiti with his cronies when things got rough, taking a big chunk of the wealth with them. The U.S. is clearly not that bad yet, but think of this every time a wealthy person / corporation threatens to take their money and business overseas if they don’t get e.g. the tax changes they want: every year that the income distribution gap widens, that threat becomes more potent.
Increasingly, the U.S. is not a wealthy country – it is a country where some extremely wealthy entitities happen to be located – which can change on very short notice…
Money supply is finite – the more they have the less we have, the less we have the more we are simply wage slaves (if we are lucky enough to have jobs). At a certain point they will have so much that they won’t need us to buy much of anything.
This comic makes me ROFC – roll on the floor in a fetal position, crying.
I like TTDB, but RB’s understanding of economics is pretty amazingly bad. Then again, so is the general public’s, so I guess he’s writing to his audience.
Any entity – state or federal government, corporation – is going to pay more interest if its credit rating is low. Its credit rating is based on its ability to save money and pay back its debtors. The “bond vigilante” label is based on people like George Soros, who try to make money from countries that have credit that is higher than it should be, based on their ability to pay. They don’t cause the country to suffer unduly, they cause it to suffer in a week what would normally be more drawn out for a few months or a year.
Our interest rates are low now only because investors don’t know where else to put their money, hence our economy should be a target to bond investors who specialize in this technique.
The problem is that we’re screwed regardless of whether or not “bond vigilantes” do what they do – they just force us to address the problem more quickly.
We are past the point where not saving money is an option, if our interest rates resumed to “market rates”, most investors think they would be two or three times current rates, which would mean 1/4 of the US federal budget would go towards paying interest. If you want to give rich investors and bankers more money, then sure, we can spend more money and pay them more in interest later, but don’t kid yourself, that’s what we’re doing by not saving money.
If this is true why did Japan’s bond prices not go up after being downgraded by Moody below Botswana in 2002?
The reason, is because buyers still believed the Japanese economy was still a good investment considering the risk and reward.
This is why the prices of US bonds continue to decline even after the stimulus,and are pretty much at record lows.
Or so says that oh so shrill Nobel prize wining economist.
If people don’t feel like they have a better option, then they will buy bonds. This is why the Japanese people bought their own bonds, because their stock market has been falling since 1990.
This is the same reason US treasury bonds haven’t fallen (and thus have maintained low interest rates), the Federal Reserve keeps buying them and no large banks want to sell them because they don’t know what else they would buy with the money (and they don’t want to cause a crash in their value, for the sake of the international banking system as a whole).
I agree that Krugman is very intelligent, my problem with him is that he doesn’t know the future, and by saying “rates will not go up dramatically or anytime soon”, he’s saying things with a level of certainty that nobody should. He’s saying that we shouldn’t have a “plan b”.
He could be 100% right, I don’t know. But what he’s saying runs counter to some of the most basic tenets of finance.
I think it does nothing but make us greater slaves to banks when we continue to borrow, and that it makes no sense to say that the wealthy want us to stop borrowing.
Your problem with Krugman is, “he doesn’t know the future”? Is there irony there that I don’t see?
He doesn’t predict the future, because he relies on models. His models have been accurate to date, unlike essentially all of his critics. As I understand it we are in a liquidity trap, so many things that normally are true are not.
This is why despite the fact that Fed has printed money the price of borrowing for the U.S. government has gone down.
This maybe why some people prefer the simpler narrative that too much government burrowing crowds out investment. They believe only is we are thrifty and save money will we get our economy growing again. A simple story I will grant you, but it doesn’t address the concern that as a whole people are not spending as much as they could because they are excessively worried about the future, aka aggregate demand. Or put another way people are as overly pessimistic now, in the same way they were under pessimistic 5 years ago.
We can at least take comfort that our grandparents were no smarter than we are:
As the prof said just a few days ago, “But in a way, thatâ€™s whatâ€™s so depressing: 75 years of economic research have apparently had no impact on perceptions, either among the public or among the political elite.”
No. My problem with him is that he *thinks* he knows the future. He states things in absolute terms that does not give room for alternate possibilities, which is the same as thinking that you know the future. This is true for a lot of economic pundits, not just Krugman.
We are in a period of deflation due to debts being paid down and lending and borrowing being reduced. We also deal in the US dollar, the world’s currency standard. This is the main reason that things aren’t operating as “normal”, and the fed can print money to finance our entire deficit, because our currency used to be the thing that people used as a control to measure others against. If this was happening in almost any other country we would have had a collapse of debt long ago.
Here is one example of a formerly strong economic power getting in too much debt.
Basically, using any normally accepted measures, we need to seriously reduce spending. However, since so much of the world has huge problems, and since the dollar is the world standard, and the US economy has such enormous influence, we are not feeling the “pain” that we would if we were a normal country. The real question is if countries like India, Brazil and China, who have money, will “decouple” from the US, and their citizens will start to spend and borrow, and their economies will look like good replacements for the dollar/us bonds. When or if that happens, our interest rates would increase and/or our dollars would be worth much less in foreign exchange.
My problem with him is that he *thinks* he knows the future
 :-)
I think a more relevant example is not Argentina, but the US after the Great Depression. Our debt to GDP ratio is much lower now then then.
p.s. don’t forget someone’s debt is always someone else’s asset
My understanding from growing up in a town filled with rich kids while not being rich myself is that they really, really enjoy their privileges — the bigger the gap in wealth, even if they lose money themselves, the more privileges they can have — the private beach, the expensive toys, exclusive clubs, and so on. The rising middle class means they (gasp!)have to share, and allow the plebes and nouveau riche into their playpens.
As opposed to the rest of us who only really enjoy our privileges? Our middle-class iPods, cars and cell phones are a privilege compared to subsistence farming in Africa, but does that make us wrong for enjoying them?
And yeah, I know some rich people who are total privileged scumbags, and some who give extensively to the community and employ hundreds of people. Or are we only allowed to base everything on tired old class-warfare stereotypes now?
It’s easy to give away millions of dollars when you have tens of millions of dollars to spend. Really, what else are you going to do with that money – buy another private island? Another round of BMWs?
With paintings selling in the tens of millions at auction, you could not quite decorate a small bathroom for $100 million, if you were of that bent.
I’ve been reading Paul Krugman for years and he strikes me as being quite reality-based … as in “willing to admit that he got something wrong.” I can’t remember the specific issues re which he said, “Mea culpa,” but he has done so.
He does get testy when politicians go by their gut feelings (which seem to come partly from ideology and partly from their personal experience with their own household finances) and ignore macroeconomic history — and also ignore the enormous differences between household and national/international finance.
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